David TKHILAISHVILI et al.
Vahagn (Victor) TOROSYAN et al.
Date: August 14, 2018
DECISION AND ORDER REGARDING DEFENDANTSâ MOTION FOR
SUMMARY JUDGMENT (DOCKET NO. 29.0)
A. Davis, Associate Justice of the Superior Court
is a dispute over the partiesâ agreement to organize and
operate a new drug treatment clinic in Quincy, Massachusetts
(the "Clinic") in 2014-2015. Plaintiffs David
Tkhilaishvili ("David") and Jambulat
"James" Tkhilaishvili ("James" or,
collectively with David, "Plaintiffs") filed this
action in April 2016 against defendants Vahagn
"Victor" Torosyan ("Victor") and Allied
Health Clinic, LLC ("Allied"), the entity formed by
the parties to hold the assets of the Clinic, alleging, among
other things, that Victor breached his fiduciary duty to
Plaintiffs by improperly "stripp[ing] James and David of
their membership interests, and remov[ing] them as
managers" of Allied and Health Management Group, LLC
("HMG"), a related entity formed by the parties to
manage the Clinic. Complaint (Docket Entry No. 1.0), p. 1.
Victor has asserted a counterclaim alleging that James and
David embezzled money from the Clinic, and later threatened
to kill Victor and his family if Victor did not
"surrender" a portion of his ownership interest in
the Clinic and give up certain rights that Victor has under
the written operating agreements for the Clinic and HMG. By
means of his counterclaim, Victor seeks a declaratory
judgment that he "appropriately utilized his authority
under the operating agreements for the Clinic and HMG to
remove James as managing member of the Clinic and David as
managing member of HMG," and also to "declare David
and Jamesâ interests in the Clinic and in HMG forfeit"
as a result. Answer and Counterclaim (Docket Entry
No. 16.0), Â¶ 66.
action was filed in April 2016. In May 2016, David and James
were indicted by a federal grand jury on charges of
conspiracy to extort, attempted extortion, and healthcare
embezzlement on account of their purported dealings with the
Clinic and with Victor. This case was stayed for a period of
time while those federal criminal proceedings were pending.
After a jury trial in United States District Court in May
2017, David was found guilty on all counts and James was
found guilty of conspiracy to extort and attempted extortion.
David was sentenced to 36 months in federal prison in
December 2017, and James received a sentence of 18 months in
federal prison at the same time. Both David and James have
appealed their convictions. As of the date of this decision,
their appeals are still pending.
stay of this action was partially lifted by the Court in
February 2018. See Order on the Plaintiffsâ Motion
for a Stay Pending Appeal (Docket Entry No. 26.0). In May
2018, Victor filed a motion for the entry of summary judgment
in his favor on his declaratory judgment counterclaim. The
gist of Victorâs summary judgment motion is that David and
Jamesâ recent convictions for conspiracy to extort and
attempted extortion establish, as a matter of law, that
Victor was legally entitled to remove David and James as
members of Allied and to forfeit their interests in that
entity pursuant to the terms of the Clinicâs operating
agreement. David and James oppose Victorâs motion
for summary judgment on various grounds, including on the
basis that Victor fraudulently induced them to enter into the
version of the Clinic operating agreement that gives Victor
the power to remove David and James as members and to forfeit
their interests in Allied.
Court conducted a hearing on Victorâs motion for summary
judgment on July 24, 2018. Both sides appeared and argued.
Upon consideration of the written submissions of the parties
and the oral arguments of counsel, Victorâs motion is DENIED
for the reasons stated on the record at the hearing and
summarized, briefly, below.
judgment is appropriate when, viewing the evidence in the
light most favorable to the nonmoving party, there is no
genuine issue of material fact and the moving party is
entitled to judgment as a matter of law. Mass.R.Civ.P. 56(c);
Cargill, Inc. v. Beaver Coal & Oil Co., 424 Mass.
356, 358 (1997). Entry of summary judgment is not
appropriate, however, "if anywhere in the evidence, from
whatever source derived, any combination of circumstances
could be found from which a reasonable inference could be
drawn in favor of the [nonmoving party]." Bowers v.
P. Wileâs, Inc., 475 Mass. 34, 37 (2016) (added text in
original, internal quotation marks and citation omitted).
case, the Court agrees with Defendant that James and Davidâs
federal convictions for conspiracy to extort and attempted
extortion establish that Plaintiffs violated their fiduciary
obligations to him as a matter of law. Certainly James and
Davidâs threats to kill Victor and his family fairly can be
characterized as a breach of the duty of "utmost good
faith and loyalty" that James and David, as fellow
shareholders in Allied, owed Victor. See Merriam v.
Demoulas Super Mkts., Inc., 464 Mass. 721, 726 (2013)
("Shareholders in a close corporation owe each other a
fiduciary duty of the utmost good faith and loyalty")
(internal quotation marks and citation omitted). The dueling
affidavits submitted by the parties demonstrate, however,
that there is a genuine issue of material fact as to the
validity and enforceability of the Clinic operating agreement
that Victor relies upon to justify his removal of David and
James as members of Allied and to forfeit their interests in
the LLC. More specifically, both David and James have
submitted sworn affidavits which assert, in relevant part,
that Victor fraudulently induced them to execute signature
pages that Victor subsequently attached to a version of the
Clinic operating agreement that was materially different from
the version that Plaintiffs had agreed to. See Affidavit of
David Tkhilaishvili Submitted in Support of Plaintiffsâ
Motion for Preliminary Injunction, filed April 20, 2016, Â¶Â¶
19-29; Affidavit of Jambulat "James" Tkhilaishvili
Submitted in Support of Plaintiffsâ Motion for Preliminary
Injunction, filed April 20, 2016, Â¶Â¶ 13-22. "It is
black-letter law" in this Commonwealth that an agreement
obtained through fraud "is voidable by a party who [was]
fraudulently induced to enter into it." Green v.
Harvard Vanguard Med. Assocs., Inc., 79 Mass.App.Ct. 1,
11 (2011). It also is well-established that "the
question of fraud is not one of law, but one of fact for the
jury." Matthews v. Thompson, 186 Mass. 14, 23
(1904) (internal quotation marks and citation omitted). Thus,
the partiesâ genuine dispute concerning the validity and
enforceability of the Clinic operating agreement precludes
the entry of summary judgment in favor of Defendant. See
Mass.R.Civ.P. 56(c); Cargill, Inc., supra.
 The Clinic operating agreement provides,
in relevant part, that the violation of a memberâs
"fiduciary duty of good faith and loyalty to the
[Clinic] ... will be grounds for immediate removal as a
Manager" of the same. See Statement of Undisputed
Material Facts (Exhibit A to Docket Entry No. 32.0), Â¶ 14.
The Clinic operating agreement also provides the violation of
a memberâs "fiduciary duty of good faith and loyalty to
the [Clinic] ... will be grounds for forfeiture of such
Memberâs entire interest" in the same. Id., Â¶
 Following Plaintiffsâ convictions, the
Court continued the stay with respect to any discovery that
might implicate Plaintiffsâ Fifth Amendment rights, but
lifted the stay on the filing of dispositive motions.
 Although Victorâs counterclaim requests a
judicial declaration that he "appropriately utilized his
authority under the operating agreements for the Clinic
and HMG to remove James as managing member of the
Clinic and David as managing member of HMG" (Answer and
Counterclaim, Â¶ 66 (emphasis added)), his current motion for
summary judgment requests only a legal determination with
respect to Victorâs actions involving the Clinic (i.e.,
Allied), not HMG. Motion for Summary Judgment by Vahagn
Victor Torosyan and The Allied Health Clinic, LLC at
 This is true even though James and Davidâs
federal convictions currently are on appeal. See OâBrien
v. Hanover Ins. Co.,427 Mass. 194, 201 (1998) (adopting
"majority rule" that a "trial court judgment
is final and has preclusive effect regardless of ...